Share Division in Proposed BAE Merger Called ‘Very Fair’

Sep. 26, 2012 - 08:27AM
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BERLIN — EADS chief executive Tom Enders said Sept. 26 that the division of shares in its proposed merger with BAE Systems was “very fair” after addressing German lawmakers.

“I consider the 60 to 40 value ratio very fair,” Enders said after appearing at the Bundestag’s economic affairs committee on the proposed tie-up between the European Aeronautic Defence and Space Company (EADS) and British arms maker BAE Systems.

BAE Systems and EADS revealed earlier this month that they were in talks to form a global aerospace and defense leader that would compete more effectively against U.S. rival Boeing.

Crucially, however, the proposed transaction would give BAE 40 percent of the proposed enlarged group and EADS the majority 60-percent stake.

Under the plan being discussed, the newly merged group would issue special golden shares to each of the French, German and British governments to replace their current ownership structures.

Enders also said after leaving the German parliamentary committee that other companies of a similar size had shown that a state shareholding was not necessarily required.

According to an economy ministry report, Berlin has reservations over the fact that EADS, the parent company of Airbus, would hold only 60 percent of the new group under the proposed $45-billion (35-billion-euro) deal, and that veto rights of participating countries would be limited.

It also said there had been inadequate guarantees on keeping company plants open, potentially threatening jobs.

EADS has operations in France, Germany and Spain.

Berlin and Paris have taken a wait-and-see approach to the proposed tie-up, which must be finalized by Oct. 10 and was a major topic for talks between German Chancellor Angela Merkel and French President Francois Hollande over the weekend.

Defense ministers from Germany, France and Britain are also due to discuss the plan in Cyprus on Sept. 26.